The latest on California politics and government

October 26, 2011

Gov. Jerry Brown will propose a higher retirement age and a less generous pension system for newly-hired state workers, sources familiar with Brown's pension plan said this afternoon.

The Democratic governor, who is expected to release his pension plan Thursday, will also propose prohibiting the purchase of additional retirement service credit, or "airtime," for existing employees. And he will call for a ballot measure to reshape the governing board of the California Public Employees' Retirement System, requiring changes to Proposition 162, the 1992 initiative that strengthened the retirement board.

The proposal includes some of the same ideas Brown discussed with Republicans in failed budget talks in March. At the time, however, Brown was thought to be considering for new employees a "hybrid option" involving 401(k)-style benefits, not making that hybrid mandatory for new employees.

The hybrid option Brown will propose for new non-public safety employees will be a three-pronged plan that combines a smaller, defined benefit with Social Security and a 401 (k)-style benefit.

The plan, as presented privately by the Brown administration to labor leaders this afternoon, also includes increasing the retirement age from age 55 to 67 for most new, non-public safety employees, the sources said.

Brown tried unsuccessfully to use pension changes as a negotiating tool in budget talks with Republican lawmakers earlier this year. He has said for weeks that he would release a pension plan this fall. Lawmakers would have to approve any changes.

The Brown administration privately briefed labor leaders on the plan this afternoon after the Joint Conference Committee on Public Employee Pensions met this morning for the first time, in Southern California.

Brown said in a letter to the committee's Sen. Gloria Negrete McLeod, D-Chino, and Assemblyman Warren Furutani, D-Gardena, on Wednesday that he would give them his plan for pension changes Thursday.

"Given the paramount importance of pensions to both taxpayers and public employees, it is absolutely critical that we carefully examine our current assumptions and practices," Brown said in the letter. "We have to do our best to make sure that we have a system that is fair and truly sustainable over the long time horizon that our pension and health systems require."

Brown's office did not immediately return a telephone call for comment.